Ask the Mortgage Experts

I have planning permission to build a bungalow in my garden. What's the best way to fund the build?

Posted on 4 August 2015 by Keith

Hi - I have a property recently valued at apprx £450k and I have a £50k mortgage on this although I could reduce it if needed. I have obtained full planning permission to build a detached bungalow at the bottom of my garden which I would like to do asap. I would propose to sell this as soon as it has been finished. Can u please advise me of the best way to do this and if you can possibly offer any form of mortgage package? I realise and would be happy for my existing home to be used as the security. Thanks, Keith.

Hi Keith,

For this type of enquiry, we could look at 3 main options. The first would be to raise the money needed to fund the build against your current main residence, on a product with no charges for early redemption. However, most lenders would view this as short term lending and would be unlikely to want to get involved. The second option would be to look at a self-build mortgage, of which there are quite a few out there. This is where the lender will base the mortgage on the total end value of the new property, and release the funds in stages all the way to completion. The third option would be to look at bridging finance, though this would be the most costly of all three.

We would really need to know about the rest of your personal financial situation though, before we could say which option would be the best one for you.

If you'd like to discuss your options in more detail, then please contact one of our consultants on 0344 346 3672 and they'll be able to give you a more exact idea of how we can help you.

Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.

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